The overall trajectory for tech ETFs remains positive, fueled by ongoing technological advancements and widespread adoption across industries. Additionally, government support for digital transformation and increased enterprise spending on technology further bolster the sector's growth potential.
Given this positive sentiment, adding tech ETFs such as ARK Next Generation Internet ETF (ARKW), The Technology Select Sector SPDR Fund (XLK), and Vanguard Information Technology Index Fund ETF Shares (VGT) might be wise choices now.
Firms focusing more on digital with access to advanced technologies for driving growth while decreasing cost, growing usage of cloud technologies, and using business intelligence for forecasting and optimizing company operations to earn more increased revenues are a few of the critical IT market drivers and trends fueling the growth of the market.
Additionally, the Biden-Harris Administration, through the U.S. Department of Commerce’s Economic Development Administration (EDA), announced a funding round of approximately $504 million in implementation grants to 12 Tech Hubs to scale up the production of critical technologies, create jobs in innovative industries, and accelerate the growth of industries of the future in regions across the United States.
With that in mind, let’s look at the fundamentals of the top three Technology Equities ETFs, beginning with the third one.
ETF #3: ARK Next Generation Internet ETF (ARKW)
ARKW is an actively managed ETF that seeks long-term capital growth by investing under normal circumstances, primarily in domestic and U.S. exchange-traded foreign equity securities of companies relevant to the fund’s investment theme of next-generation internet.
With $1.93 Billion in AUM, its top holdings are Tesla, Inc. (TSLA) with an 11.4% weighting, Roku, Inc. (ROKU) at 7.7%, and Coinbase Global, Inc. (COIN) at 6.8% weight.
The ETF’s expense ratio is 0.82%, compared to the category average of 0.55%. ARKW’s fund inflows were $32.52 million over the past month.
ARKW has gained 44.4% over the past three months to close the last trading session at $117.10. It has a five-year beta of 2. The fund’s NAV was $117.05 as of December 13, 2024.
ARKW’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The fund has an A grade for Trade, Peer, and Buy & Hold. ARKW is ranked #19 in the Technology Equities ETFs ETF. Click here to access all the ARKW ratings.
ETF #2: The Technology Select Sector SPDR Fund (XLK)
XLK seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index. The index aims to provide precise exposure to companies in the areas of technology, hardware, storage and peripherals, software, communications equipment, semiconductors, and semiconductor equipment, among others.
With $74.60 billion in AUM, the fund has a total of 15 holdings. XLK’s top holding is Apple Inc. (AAPL) with a 15% weighting, followed by NVIDIA Corporation (NVDA) with a 13.7% weighting, and Microsoft Corporation (MSFT) with 13.4%.
XLK has an expense ratio of 0.09%, lower than the category average of 0.58%. It currently has a NAV of $239.08. Its fund inflows came in at $83.51 billion over the past month.
The fund’s annual dividend of $1.56 yields 0.65% on the current share price. Its four-year average yield is 0.80%. Its dividend payouts have increased at a CAGR of 12.2% over the past three years and 8.7% over the past five years.
XLK has gained 25% over the past year and 14.5% over the past nine months to close the last trading session at $239.05.
XLK’s POWR Ratings reflect solid prospects. Its overall rating of A equates to a Strong Buy in our proprietary rating system.
XLK has an A grade for Buy & Hold and Trade. Of the 119 ETFs in the same group, it is ranked #2. Get all XLK ratings here.
ETF #1: Vanguard Information Technology Index Fund ETF Shares (VGT)
VGT employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index/Information Technology 25/50, an index made up of stocks of large, mid-size, and small U.S. companies within the information technology sector.
With $84.78 billion in AUM, VGT’s top holding is AAPL, with a 15.8% weighting, followed by NVDA, with a 15.4% weighting, and MSFT, with 13.3%. VGT has a total of 15 holdings.
VGT has an expense ratio of 0.10%, lower than the category average of 0.58%. It currently has a NAV of $640.27. Its fund inflows came in at $1.07 billion over the past month.
The ETF pays an annual dividend of $3.73, which yields 0.58% on the current price. It has a four-year average dividend yield of 0.73%. Its dividend payouts have increased at a CAGR of 10.2% over the past three years and 8.1% over the past five years.
VGT has gained 33.7% over the past year and 22.1% over the past nine months to close the last trading session at $640.43.
VGT’s POWR Ratings reflect its promising prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
VGT has an A grade for Buy & Hold and Trade. In the same ETF group, it is ranked first. Click here to access all of VGT’s POWR Ratings.
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VGT shares were trading at $645.36 per share on Monday afternoon, up $4.93 (+0.77%). Year-to-date, VGT has gained 34.04%, versus a 28.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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